The NBA said on Friday (local time) it will go ahead with a vote on terminating Donald Sterling's ownership of the Los Angeles Clippers, although it signaled that a proposal by Sterling's estranged wife to sell the basketball team was its preferred course.

The National Basketball Association said in a statement that co-owner Shelly Sterling had notified it late on Thursday (local time) that she had reached an agreement to sell the club to former Microsoft Chief Executive Officer Steve Ballmer.

A source with knowledge of the situation told Reuters that Shelly Sterling is now the sole trustee of the family trust that controls the Clippers after Donald Sterling, 80, was deemed by physicians this month as having Alzheimer's disease.

Sterling's attorney, Maxwell Blecher, did not respond to phone calls or emails seeking comment. But in a statement to CNN, the lawyer called reports that Sterling was mentally incapacitated a "vast overstatement" and said "Sterling had a diagnosis of a 'modest mental impairment.'"

The NBA said it was still awaiting necessary documentation from Shelly Sterling on the record US$2 billion agreement with Ballmer and that it would proceed with a hearing on Tuesday of its Board of Governors on whether to strip Sterling of ownership for making racist remarks.

"Commissioner (Adam) Silver has consistently said the preferred outcome to the Clippers proceeding would be a voluntary sale of the team," the NBA said in a statement.

In his first major test since becoming NBA commissioner in February, Silver has taken a strong position on punishing Donald Sterling by banning him for life from the NBA. But Silver has also signaled that the NBA wants to avoid a prolonged fight in a case that has brought shame on the league.

Sterling, the controlling owner of the Clippers for 33 years, was also fined US$2.5 million by the NBA after TMZ.com posted an audio recording of him criticizing a female friend for publicly associating with black people.

A sale of the Clippers, as well as the termination of Sterling's ownership, must be approved by NBA team owners.

"I am delighted that we are selling the team to Steve, who will be a terrific owner," Shelly Sterling said in a statement announcing the sale early on Friday (local time).

The source said language in the Sterling trust indicated that if Donald Sterling was unable to handle business, then the controlling stake would be given to his wife.

It was unclear if the NBA would call off the scheduled hearing and vote on Sterling's ownership when it receives the necessary documentation from Shelly Sterling.

Sterling last week handed controlling interest in the team to his wife, and she began negotiations with the NBA to sell the team.

Ballmer, 58, who retired as Microsoft CEO in February, outbid a group led by media mogul David Geffen that included Oprah Winfrey and Oracle Corp Chief Executive Larry Ellison, as well as a group of Los Angeles investors.

Blecher has said that Donald Sterling would have to approve any sale of the franchise.